Spread Betting Tips
Spread Betting Tips are essential to making a success of spread betting. Now when I say spread betting tips I’m not talking about buy BP at 340p or Sell HSBC at 650p, These are spread betting tips that may or may not work out for you. The kind of tips I’m talking about are the ones that are required to become a successful spread bettor and stay a successful spread bettor. Now I like to think of myself as a straight talker and an honest gent, therefore I’m not going to lie to you and tell you that spread betting is easy if you follow a few simple tips. Oh no, In fact it’s the complete opposite. Financial Spread Betting is hard work and it will take time for you to develop and hone the necessary skills required to make yourself a success in the long term.
What I have done however, is to compile a list of my best tips that I have learnt on the path to spread betting success. I can’t promise riches beyond your wildest dreams from following the Spread Betting Tips included in this website but hopefully they might help you along the way to spread betting success.
Rule 1. – Learn to Master Yourself
If you are new to spread betting you may not realise the importance of mastering your own emotions just yet. Emotions, if not completely controlled, can cause you much pain and suffering be it through letting losses run or cutting profits short. It’s of the up most importance that you start to master your emotions from the very start of your trading career. If you do not work on yourself and your emotions you will have lost the game before you have even begun. One of the ways the pro spread bettors master their emotions is to remove them completely from their trading. They use a spread betting strategy which governs their every move from, entry, to moving stops to exiting the trade. A spread betting strategy is a must if you want to become a successful spread bettor and the sooner you start to develop your own strategy the better.
Rule 2. – Develop a Spread Betting Strategy and Stick to it
Every successful spread bettor that you speak to will tell you they have some kind of written spread betting strategy or trading plan. It’s important to have one as it will govern everything you do. It should include, but not be limited to, the following:
- When to enter a trade
- When to exit a trade
- Where to place an initial stop loss
- When to trail a stop
- How much to risk per trade
- How many £ per point to risk per trade
- When to take a profit
- Under what market conditions you should trade
- When you should not trade
- When you should exit a trade if it goes against you
- What you will do if you cannot check your trades for a day, a week, or even a month
- What you will do If your internet or phone connection is out of service
As you can see there are many things to consider when creating a trading plan and these are just a few examples. Some professional spread bettors have trading plans that are hundreds of pages long and are a constant work in progress. So if you are just embarking on your spread betting career now start your trading plan and get it off the ground. It doesn’t have to be hundreds of pages long right away but you will get there over time. The important thing is to start it now. If you leave it too long it will become a chore to do and you will not want to do it. So start it early and add too it a bit at a time. 10 minutes here and there will soon add up trust me.
Rule 3. – Keep Track of Your Trades via a Trading Diary
Keeping track of your spread bets is a very good tip and not one that should be overlooked. Ok so it can seem like a chore logging everything down and keeping track of every spread bet you make, but remember spread betting is a skill that you will develop and hone with time and experience. Keeping track of your spread bets in a spread betting diary will allow you to look back and asses your performance. Doing an assessment in such a way will enable you to identify what you did right and more importantly what you did wrong. Time and time again I hear stories of people making the same spread betting mistakes over and over again. In my opinion you can completely avoid making the same mistakes by keeping a trading diary. The important thing is to start one and keep on top of it. It will probably take you less than 5 minutes a day to maintain but if you put it off an leave it for a while it will build up into a laborious chore.
It doesn’t really matter what form the diary takes as long as it works for you and you maintain it. You can create a excel spread sheet and keep track of your, dates, open, close and stop prices. You can keep a log in a word document. You can buy a note pad and keep a handwritten journal if you’d prefer. If you want to get more technical why not create a spread betting blog or keep a trading diary. Whatever method you decide upon start a trading diary today if you don’t have one already. How can you learn from your mistakes if you keep forgetting them. Write them down and try not to repeat them. You never know it might just save you money.
Rule 4. – Start Small but Keep it Real
Spread Betting Tip No. 4 is to start small but keep it real. You may hear of people suggesting to open a demo account and paper trade for a while until you develop your edge via a spread betting strategy. This is a good idea but I think that doing this can make you less disciplined and ultimately make you a poor trader. Say for instance you open a demo account and the spread betting company gives you £10,000 to have a play with. You will probably do just that, play with it. Big mistake. If you lose £8,000 you’ll probably think oh well it was only play money anyway. So what did you learn. Nothing. If on the other hand you are lucky enough to make £8,000 you might start to think this spread betting game is easy. So you open a live account with £10,000 of real money and end up losing the lost because you became over confident and cocky.
The best thing to do is start real but keep is small. Spread betting companies like IG Index offer £0.10 per point trading for a fixed period after opening an account with them. In my view this is fantastic. If you lose 100 points at £0.10 per point you’ll have lost £10. Probably not going to break the bank for most people but you will learn so much more from losing £10 of your own money than you will ever learn from a demo spread betting account. To be honest to start with you will probably find you will lose more than £10 and probably more than once. The important thing is to take the lessons that making these losses teaches you and using that to avoid making the same mistakes.
Rule 5. – Learn your Preferred Markets to Trade
As I’m sure you are very well aware there are many many different financial markets that are available to trade these days. Many of these can be traded via your spread betting account. Be it FOREX, UK Equities, Currencies, Indices, US Equities, Equities from other countries, Interest rates, the list is almost endless. If there is a financial market out there you can almost be sure a spread betting firm will allow you to trade it in some form or another.
With all these markets available it’s easy to want to spread bet them all. With Indices and Commodities moving hundreds of points a day it can be easy to make big money in a short space of time. The thing is it’s probably even easier to lose all that money and more even quicker. If you are new to trading a good tip is to pick one or two financial markets and stick to trading them. It may take a few times of trying before you find the right market for you but it’s important that you stick with only a few. This will allow you to become familiar with the markets you trade and develop a relationship with it. You will begin to get a better understanding of what makes the market move and this may help you to develop and hone your spread betting strategies for the specific markets you trade.
If you go at it like a bull in a china shop and try to trade all the markets available all at the same time you are almost certainly going to end up in the poor house much sooner than you had bargained for. Now I’m not saying that by only trading a few markets you are guaranteed to make profits, far from it. There is no guarantees in trading and the sooner you realise that the better. You can lose money just as easy, if not easier, than you can make it. Take your time learn and understand the markets that you want to trade and this might just help you on the path to spread betting success.
Rule 6. – Be patient, the perfect trade is just around the corner
Patience in spread betting or any form of financial trading is paramount. If you go trading every day and taking opportunities that looks like a good trade the your sure to wind up broke pretty quick. The thing you need to realise is there is no such thing as a missed opportunity. So today yup were going to trade the FTSE100 as you thought it might go up in price, and it did. You may view this as a missed opportunity but there is no such thing. The next day you get the same entry signals that your strategy dictated the day before so you make the trade and guess what it goes up by even more. Of course this is a very hypothetical situation, but it illustrates the point that there is no such thing as missing out in trading. There will always be another trading opportunity along tomorrow and you never know it may be better than the one you just missed. Have patience, wait for the right trades to come along and trade when you feel it’s right. Remember sometimes the best thing to do is nothing.
Rule 7. – Plan the Trade and Trade the Plan
You may or may not have already heard this phrase “Plan the Trade and Trade the Plan”. It’s one that is key to successful spread betting. Every successful spread bettor that you will speak to will tell you they have a trading plan or spread betting strategy in place which governs how they make trades, take profits and when to cut losses. Your plan should cover every possible outcome for your trade and therefore you know the exact result for each possible scenario and are therefore not surprised when either of them arise.
Before you place a new spread bet consult your trading plan. If there is any part of the trade that you are unsure of then pass up the trade and wait for a better opportunity to come along. You may think “but I might miss out!”. Well believe me there is no such thing as a missed opportunity in the world of stock market trading. Tomorrow is another day and with it brings a whole new heap of trading opportunities. Don’t be afraid to pass up on a trading opportunity.